We often use this space to focus on small- and medium-sized enterprises (SMEs). The reason is that those businesses represent a big part of our economy. According to the most recent data available from the Small Business Administration (SBA), there are roughly 27 million small businesses operating in the United States. Further, U.S. small businesses create more than half of the national GDP.
We also focus a lot on providing globalization tips for businesses of all sizes. That’s because, with 96 percent of the world’s consumers living beyond U.S. borders, U.S.-based SMEs that don’t go global are missing lucrative growth opportunities.
There’s compelling evidence that going global can boost the top and bottom lines of SMEs. The SBA found that companies engaged in international trade are 20 percent more productive, have 20 percent greater job growth, and are nine percent more likely to stay financially solvent.
UPS has long been advocating the benefits of international commerce to our customers of all sizes, but doing business outside of the U.S. does present new logistical challenges.
Consider all that’s involved with going global: How will the goods move from Point A to Point B, especially with an ocean in between? How can a small business finance a global supply chain and maintain a strong cash position when goods could be in transit for days or weeks? And what about clearing customs and managing long-distance relationships with trade partners?
Most large companies have the resources to meet those challenges, but they can be intimidating for SMEs. However, with a smart logistics strategy, proper technology and a reliable and expert third party logistics provider (3PL), SMEs can turn the challenge of going global into a lucrative growth opportunity, just like large companies.
Here are three tips that can help SMEs expand beyond U.S. borders.
Step One: Research export markets and identify partners. There are resources available to help SMEs learn more about international markets and trade partners, including the U.S. Commercial Service (USCS), a part of the U.S. Department of Commerce that functions like a consulting service for U.S. companies seeking international buyers. And SMEs will be happy to learn that many USCS services (found at www.trade.gov/cs/) are free or come at nominal costs.
Step Two: Develop a logistics strategy. At this stage, it’s practical for most SMEs to partner with a 3PL to gain valuable expert guidance and access to world-class tools and services to automate and simplify the process of going global – some of the same tools and services the big boys use. All of this can be obtained from a single source. Think of it as “logistics in a box.”
A 3PL will initiate a planning process that considers a number of factors, including: Where are end users, manufacturers, suppliers and trade partners located within the supply chain? Where do orders originate? Where are distribution centers located in relation to customers? What are the SME’s current fulfillment and delivery capabilities, and what adjustments are necessary to reach international goals? What segments of the supply can/should be outsourced?
A strong logistics planning process that covers all of those logistics questions … and several additional important considerations … will help a SME design a global supply chain that can quickly respond to marketplace requirements and lead to a positive return on investment.
Remember, technology is critical in navigating the complex global marketplace. Technology-based solutions can help manage everything from inventory optimization to exporting to distribution, and an array of other functions to make a global supply chain more effective.
Step Three: Getting your products to market. Shipping is just one component of getting your products to market in other countries. It’s really all about logistics. And logistics is all about choreographing the movement of goods, information and funds into one efficient, seamless supply chain.
Think of global supply chain logistics as a stool with three legs. One leg is the movement of goods. Another leg is the movement of information about those goods. And the third leg is the movement of funds related to those goods. For the stool to remain standing, it’s critical for each of the three legs to operate in unison.
SMEs can utilize multiple transportation modes to move goods in a global supply chain, including ground, rail, ocean and air freight. Again, work with a global 3PL to determine the best transportation combination to move goods as efficiently and cost-effectively as possible.
Regardless of where customers are located, SMEs must provide them with order and shipping information. Again, technology is the key. With the proper tech-based visibility solutions, SMEs have easy access to inventory levels, order status and shipping information and can proactively supply that information to customers to reduce WISMO calls.
The movement of funds is the critical third leg of the logistics stool. SMEs fear a global supply chain may wipe out the cash needed to run its day-to-day operations. Most traditional banks are hesitant to finance in-transit cargo because they lack visibility into the movement of the goods. However, there are other types of lenders SMEs can turn to. For instance, UPS Capital, the financial services arm of UPS, can advance funds against the in-transit inventory to provide working capital earlier in the supply chain.
A quality global 3PL can help by providing a single source for the technology, financial services and logistics expertise needed to successfully expand into new markets and compete with larger companies.
We also focus a lot on providing globalization tips for businesses of all sizes. That’s because, with 96 percent of the world’s consumers living beyond U.S. borders, U.S.-based SMEs that don’t go global are missing lucrative growth opportunities.
There’s compelling evidence that going global can boost the top and bottom lines of SMEs. The SBA found that companies engaged in international trade are 20 percent more productive, have 20 percent greater job growth, and are nine percent more likely to stay financially solvent.
UPS has long been advocating the benefits of international commerce to our customers of all sizes, but doing business outside of the U.S. does present new logistical challenges.
Consider all that’s involved with going global: How will the goods move from Point A to Point B, especially with an ocean in between? How can a small business finance a global supply chain and maintain a strong cash position when goods could be in transit for days or weeks? And what about clearing customs and managing long-distance relationships with trade partners?
Most large companies have the resources to meet those challenges, but they can be intimidating for SMEs. However, with a smart logistics strategy, proper technology and a reliable and expert third party logistics provider (3PL), SMEs can turn the challenge of going global into a lucrative growth opportunity, just like large companies.
Here are three tips that can help SMEs expand beyond U.S. borders.
Step One: Research export markets and identify partners. There are resources available to help SMEs learn more about international markets and trade partners, including the U.S. Commercial Service (USCS), a part of the U.S. Department of Commerce that functions like a consulting service for U.S. companies seeking international buyers. And SMEs will be happy to learn that many USCS services (found at www.trade.gov/cs/) are free or come at nominal costs.
Step Two: Develop a logistics strategy. At this stage, it’s practical for most SMEs to partner with a 3PL to gain valuable expert guidance and access to world-class tools and services to automate and simplify the process of going global – some of the same tools and services the big boys use. All of this can be obtained from a single source. Think of it as “logistics in a box.”
A 3PL will initiate a planning process that considers a number of factors, including: Where are end users, manufacturers, suppliers and trade partners located within the supply chain? Where do orders originate? Where are distribution centers located in relation to customers? What are the SME’s current fulfillment and delivery capabilities, and what adjustments are necessary to reach international goals? What segments of the supply can/should be outsourced?
A strong logistics planning process that covers all of those logistics questions … and several additional important considerations … will help a SME design a global supply chain that can quickly respond to marketplace requirements and lead to a positive return on investment.
Remember, technology is critical in navigating the complex global marketplace. Technology-based solutions can help manage everything from inventory optimization to exporting to distribution, and an array of other functions to make a global supply chain more effective.
Step Three: Getting your products to market. Shipping is just one component of getting your products to market in other countries. It’s really all about logistics. And logistics is all about choreographing the movement of goods, information and funds into one efficient, seamless supply chain.
Think of global supply chain logistics as a stool with three legs. One leg is the movement of goods. Another leg is the movement of information about those goods. And the third leg is the movement of funds related to those goods. For the stool to remain standing, it’s critical for each of the three legs to operate in unison.
SMEs can utilize multiple transportation modes to move goods in a global supply chain, including ground, rail, ocean and air freight. Again, work with a global 3PL to determine the best transportation combination to move goods as efficiently and cost-effectively as possible.
Regardless of where customers are located, SMEs must provide them with order and shipping information. Again, technology is the key. With the proper tech-based visibility solutions, SMEs have easy access to inventory levels, order status and shipping information and can proactively supply that information to customers to reduce WISMO calls.
The movement of funds is the critical third leg of the logistics stool. SMEs fear a global supply chain may wipe out the cash needed to run its day-to-day operations. Most traditional banks are hesitant to finance in-transit cargo because they lack visibility into the movement of the goods. However, there are other types of lenders SMEs can turn to. For instance, UPS Capital, the financial services arm of UPS, can advance funds against the in-transit inventory to provide working capital earlier in the supply chain.
A quality global 3PL can help by providing a single source for the technology, financial services and logistics expertise needed to successfully expand into new markets and compete with larger companies.
